Increase the Minimum Wage in Taiwan
As of this writing, the minimum wage in Taiwan is NT$41,750 per month, making it the third highest in the world. However, this is still not enough for many workers. In fact, the minimum wage is uneven and unequal. Its slow growth rate and low productivity are contributing to the stagnant wages. The political class is responsible for the situation as the new generations rely on their salary for survival. In fact, the stagnant wages have led to numerous protests last March.
NT$41,750 a month
If the NT$41,750 a month monthly minimum wage was increased in a steady and equitable manner, the median monthly salary in Taiwan would be NT$51,467 today. At the present, however, the minimum wage in Taiwan is just NT$41,750, meaning that half of the country’s working population is earning less than the basic standard of living. With the minimum wage stagnant in Taiwan, it’s important for the government to implement concrete plans to increase it. Continuing to procrastinate will only exacerbate social problems and weaken democracy and national security.
In terms of living standards, Taiwan’s minimum wage is far below the levels of other advanced countries. Its prices of groceries and housing are among the highest in the world. The minimum wage is simply not adequate to keep up with the rising cost of living in Taiwan. If it were, then Taiwan’s economy would be better off. However, this won’t be enough for the average person to live on a minimum wage that’s half that of other countries.
While Taiwan has gone 13 years without a minimum wage increase, it still lags behind the United States, France, Germany, the Netherlands, and Belgium. In fact, Taiwan’s minimum wage is only about a third of the world’s optimal level – NT$41,750 a month. Taiwan is the only Asian country whose minimum wage hasn’t been boosted by more than 5% in the last four years.
The government should not give in to the business lobby and the unjustified profit maximization that drives Taiwan’s economy. This is an unacceptable and dangerous situation, especially as Taiwan has wasted about 20 or 30 years in its transition to a higher value-added, innovation-led economy. Taiwan should drastically increase its minimum wage, and abandon the broken economic model based on self-interested profit maximization. It should instead create an economic system based on social solidarity and the needs of all its citizens.
Labor exploitation is a pervasive problem in Taiwan, but the government is determined to support its business owners at all costs. Taiwan’s government has failed to act to support its workers, despite their needs. It is not surprising that many local employees are forced to work from home during pandemics, and low-income migrant workers are often exploited by their employers. This lack of social justice has led to a complete erosion of basic decency and ethics.
There are other reasons why Taiwan’s minimum wage is so low, including its inability to keep pace with inflation. Taiwanese workers, for example, saw a 0.7% increase in their wages last year. It is crucial that Taiwan’s government follow this example, because Taiwan’s minimum wage is currently at only NT$4,000. Taiwan’s government could do so by boosting its minimum wage by NT$4,000 to 5,000 annually for the next four years. But given the low wages in Taiwan, this would be paltry by international standards.
It is important to realize that Taiwan’s minimum wage would have increased to over NT$41,750 today if it had not been pushed down to the mid-1990s. Currently, Taiwan’s median wage is only NT$41,750 a month, which is far below the standard of living for half of Taiwan’s population. Taiwan’s minimum wage needs to be correlated with the cost of living in order to be competitive and make it worthwhile for workers in the country.
The government should decouple the basic wage of citizens from the wages of foreign workers. This would prevent domestic enterprises from paying their workers low wages and subsequently driving away local workers. Taiwan’s basic wage was last increased in January 2014 from NT$109 to NT$115 per hour to NT$19,273 on 1 July 2014.
In Taiwan, the government’s recent move to implement a more equitable minimum wage has been met with some criticism. While the country is determined to support business, it has not shown the same commitment to helping workers. During the recent pandemic, the government did not do anything to increase the minimum wage for local employees. Ultimately, this will only make the situation worse for those who are employed. But the government’s latest move could help remedy the situation.
The cost of living in Taiwan is so high that the minimum wage is no longer able to keep up with rising prices. Taiwan now ranks second among advanced countries in the number of years with no increase. The government should act quickly to raise the minimum wage. However, procrastination will only create more social problems and impede the country’s democratic system and national security. Therefore, a concrete plan for raising the minimum wage is necessary.
The government should not give in to the pressure of businesses, but rather make it clear that Taiwan has lost the opportunity to move to a more innovative, higher-value economy. It needs to drastically increase the minimum wage, and abandon the broken economic model based on selfish self-profiteering. The new economic model should promote social solidarity and work in the interests of its citizens. By doing so, Taiwan can finally catch up with other advanced economies in terms of human capital.
Despite these challenges, the government should still introduce legislation to increase the minimum wage in Taiwan. Many other advanced countries have already introduced minimum wage legislation. And the Ministry of Labor in Taiwan recently sent a draft bill to cabinet. Taiwan’s minimum wage has been suppressed for two decades. But its government has yet to act. In 2018, President Tsai promised to promote the minimum wage act. Taiwan’s low-cost economic structure has made it difficult for businesses to pay higher wages.
Until the mid-1990s, Taiwan’s minimum wage would have kept up with profits and exports. But Taiwan’s excess profits are now invested in housing, escalating housing prices and creating a more lopsided economy. In the past, Taiwan’s minimum wage kept up with its economic growth, and it was closely correlated with corporate profits. This trend, however, needs to be reversed. Taiwan should also look to Singapore as an example to increase the minimum wage for a small group of workers.
While the government of Taiwan is clearly determined to support the business community during this global economic crisis, it has shown little determination to help workers. Instead, the government has failed to take any decisive action to increase the minimum wage in Taiwan. Despite this, Tsai has called for a new approach that is based on social solidarity and working in the best interest of all citizens. To that end, the government should raise the minimum wage in Taiwan and make it more competitive.
The Taiwan wage structure is evolving as a result of rising college-educated workers. Taiwan has a high rate of college-educated workers, and the premium for their wage income is nearly double that of high school graduates. Nevertheless, the premium over high school graduates has remained relatively stable until after 2003. Therefore, wages for college graduates are slowly increasing, while the minimum wage remains low. This trend has implications for wage inequality in Taiwan.
The slow growth of minimum wage in Taiwan is a significant problem. In an advanced economy like South Korea, the minimum wage is set to increase by NT$40,000 every year, so the government should consider raising the minimum wage to keep up with the cost of living. However, Taiwan’s minimum wage has been suppressed for the past two decades. While the government has promised to introduce a minimum wage act in 2018, the government has failed to act. The current economic structure of Taiwan has a lopsided effect on its minimum wage, leading to stagnant innovation and low productivity.
The government is facing a tough economic climate in Taiwan. Taiwan’s young population rely on their salaries to survive, and without parental help, they cannot afford to live a decent standard of living. The stagnant wages and high cost of living contributed to the protests in March last year. It’s no wonder Taiwanese businesses are reluctant to adjust. The current economic climate and political situation in the country is not ideal.